What is SAP software used for in companies?
SAP has too many products to offer but I will limit my answer to SAP ERP solution which is the market leader in ERP solutions.
So, what does SAP do in a company — it facilitates and records all the business processes for a company — let’s take an example of a company making shirt buttons. The business process of this company is to:
- buy plastic from vendors,
- mould it into buttons using a machine M1, operated by operator P1
- then punch holes using machine M2, operated by operator P2
- pack the buttons in boxes using M3, operated by operator P3
- and then ship them to customers
Now, how would one know which vendor supplies you what kind of plastic. SAP manages the relationship so the buyer can pick the correct vendor for the required product.
How does the vendor know, how much is to be supplied. SAP generates a purchase order containing all the details, which is sent to the vendor.
How much to pay the vendor, SAP gives you functionality to process vendor invoice and informs finance department to pay the vendor.
How does operator knows what to do on M1, SAP creates a production order which P1 can see and know.
How does P2 know when to start. SAP lets P1 to confirm the completion of operation on M1 so that P2 can start…. so on.
How does the sender know, how many boxes to be sent to which customer. SAP gives you a sales order which has all the relevant details required by sender.
So SAP enables a company to carry out its day to day activities. Now, a company like above can not wait for a customer to ask for button and then start buying the plastic. Instead they would want to keep buttons in stock to quickly fulfil demand before their competitor does.
So, SAP gives planning ability. A company can use historical data to produce a forecast. This forecast can be fed into SAP. Then SAP can automatically generate the purchase orders to buyers with quantities and specifications. Based on lead times of vendors, SAP can create and schedule the production order. Based on production lead times, SAP can schedule the transports / deliveries to customers.
Then a company can use SAP to manage the quality of the procured materials and produced goods and decide accordingly.
SAP can track and monitor when the money is due to be paid to vendors and when is due to be taken from customers.
There are many more intricate processes mapped and managed in SAP. It gives you one single platform to carry out all your business activities.